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The mill produced 1,427,000 board feet of insignia pine, of which 837,000 board feet was sold, and the balance used in the construction of mill buildings at Waipa or reserved for subsequent use in the Waipa box-factory. Details of timber sold were as follows : — Green sales . . 767 ,000 bd. ft. £6 ,088 (15s. 10d. per 100 bd. ft. f.o.r. Rotorua). Air dry sales .. 70,000 „ £632 (18s. Id. „ ). Total 837,000 „ £6,720 (16s. Id. ). 67. The fundamental financial objective of the Waipa sawmill —viz., establishing an adequate stumpage value for State forest exotic timber in the Kotorua Conservancy —has already been achieved. When efforts were made over a period of seven years to interest private operators in the working-up of this timber by modern North European mass-production equipment, the only comment was that " match sticks " could not be economically converted into sawn timber and that in any event they were worth less than Is. per 100 board feet. As judged by the usual type of operation,, such a valuation might even be on the high side as indicated by the experience of one privately-owned mill operating on State forest exotic logs in another conservancy. In this particular case, as the forest badly required thinning, it was decided as an experiment to allow a local type of mill to secure exotic-log supplies from the silvicultural operation, but although these logs have been secured free of all stumpage, the company has experienced a very substantial loss in its operation. With departmental valuation for the Eotorua stumpage at not less than 2s. per 100 board feet, or three times the ruling value of that date, the Government embarked on the Waipa, enterprise. From the date of its commencement the Utilization Branch, under which the mill operates, has paid to the Whakarewarewa State Forest Account a stumpage of 2s. 6d. per 100 board feet for all clear-felled insignis pine, and within nine months by the 31st March, 1941, production costs had been reduced to a point where after paying this stumpage, after allowing for depreciation and obsolescence, and after providing for interest on capital, a small profit margin was available. It is hoped that the profit margin will be increased within the near future to a point which will allow the stumpage of 2s. 6d. per 100 board feet to be increased, even after payment of income-tax. 68. The other test of successful operation—consumer satisfaction—is being successfully met, although not without the occasional exceptions inherent in the bringing into full production of a plant of such large capacity. From the outset of the enterprise, three specific consumer objectives were defined—the production of precision-sawn timber, the delivery of bright clean stock free of stain and mould, and the effective merchandising of the timber. As regards uniformity of sawing, this is strikingly illustrated by the reaction of the first Wellington customer to the first truck received. He was insistent that a visit be paid to his factory in order to see the unbelievable result of planing the truck load. Instead of the usual twelve sacks of shavings from the customary load of circular sawn timber, he had only two sacks full. The equivalent of the other ten sacks had been sold by the mill in the form of boards to other customers. Both kiln drying and chemical dipping have been used to prevent sapstain, &c, and found wholly successful. Only when the treatments have been improperly applied or where no such protection has been provided, as, for instance, at the small portable mills, has there been any serious trouble with sapstain. The general freedom from stain, &c, of the Waipa stock and its bright clean appearance have gone a long way in gaining the confidence of wood users in its possibilities for a much wider and more valuable field of employment than previously. Chemical dipping is applied only in the case of timber for air seasoning and is unnecessary when the timber is to be kiln dried. The application of modern merchandising developments to the Waipa sales has been limited to date to the export section of the trade. Here flitches and boards were accurately trimmed and square cut to standard lengths and both ends of each distinctively branded with the departmental trade-mark and timber name. The results exceeded all expectation, the preparation and appearance of the export parcels earning universal commendation from every section of the Australian trade.

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